Golden Bear Re Ltd. (Series 2026-1)

The California FAIR Plan Association has entered the catastrophe bond market for the first time, seeking $250 million or greater in capital markets backed wildfire reinsurance through this debut Golden Bear Re Ltd. (Series 2026-1) cat bond issuance.

The California FAIR Plan was established by statute as an insurer of last resort to ensure that all California property owners are able to gain access to basic fire insurance when coverage in the traditional market is not available.

Bermuda based company Golden Bear Re Ltd. has been established to issue series of catastrophe bond notes for the California FAIR Plan, we understand.

For this first issuance, Golden Bear Re Ltd. is targeting issuance of a single tranche of Series 2026-1 Class A notes, that will be sold to cat bond investors and the proceeds used to collateralize a reinsurance agreement with the California FAIR Plan.

The initial target is to secure $250 million of protection against California wildfire losses on an indemnity trigger and per-occurrence basis with this first Golden Bear Re catastrophe bond issuance, sources told us.

The cat bond will sit high up in what appears to be a growing reinsurance tower for the FAIR Plan, with plenty of room for the deal to upsize if investor appetite proves sufficient.

The notes will provide the FAIR Plan with fully-collateralized wildfire reinsurance for the state of California running across a three year term running to the end of 2028.

The currently $250 million of Golden Bear Re Series 2026-1 Class A notes would attach their coverage at $6 billion of losses, sharing in a layer running to $7.05 billion, we understand.

The Class A notes will come with an initial attachment probability of 2.58%, an initial expected loss of 2.24% and are being offered to investors with spread price guidance in a range from 10.5% to 11.5%, we are told.

Attaching at $6 billion and being per-occurrence in nature of their coverage, these notes are only going to be exposed to the most severe of California wildfire outbreaks, it appears.

Update 1:

We’re told that the target size for the California FAIR Plan’s debut Golden Bear Re catastrophe bond issuance has been raised to now between $350 million and $500 million.

At the same time, the price guidance for the Class A notes has been narrowed towards the lower-end, for an updated spread range of 10.5% to 11%.

Update 2:

We’ve learned that the target size for this debut Golden Bear Re catastrophe bond issuance for the California FAIR Plan has been increased again, with now $750 million of wildfire reinsurance protection being sought for the first time cat bond sponsor.

At the same time, the Class A notes are now being offered with price guidance for an initial risk interest spread of 10.5%.

Update 3:

In a further update, the target size of this issuance remained $750 million, but the price guidance was revised back into a range at a lower level.

The Class A notes are now being offered to investors with price guidance for an initial risk interest spread of between 9.75% and 10.5%.

Update 4:

The California FAIR Plan secured the upsized $750 million of wildfire reinsurance from its first Golden Bear Re Ltd. catastrophe bond deal, making this the largest wildfire cat bond ever by a significant margin.

The Class A notes were priced to pay investors an initial risk interest spread of 9.75%, so the bottom end of the reduced guidance.